10 Reasons To Invest In Mutual Funds

Last updated on 24 May, 2018 | 4 comments

Tips to crack bank interviews

Mutual Funds are the hot investment ideas nowadays investors are thriving for. It has opened a new era of investment without any restriction or limit. It can be of any amount be it Rs. 500 or Rs. 5 crores and can be for any time frame. The ultra flexibility offered by Mutual Funds is making it top in the investors’ popularity list.

The Mutual Funds are not that of very young age but their popularity graph had taken the momentum in recent years. There are lots of reasons to celebrate their popularity, but let us find the top 10 reasons to invest in mutual funds. There are flexibilities in investing too- either you can go for lump sum investment or choose SIP mode of investment.

1. Mutual Fund for Everyone:

The best reason to invest in mutual funds is that it is for everybody from small investors to business magnets, from short-term investors to long-term opportunists and from no-risk investors to risk bearing barons. The best part of mutual funds is that it is diversified and it is for every interest groups.

2. To Combat Price Rise:

Prices of the commodities around us are ever increasing, but do our earnings? An average of 5 to 7 percent and in some cases 10 percent inflation rate may be witnessed, on the other hand, yearly income growth doesn’t commensurate with the same pace. Moreover other investment opportunities like fixed deposits, recurring deposits do not deliver the same amount of return as it can be by a mutual fund for the same period of time.

3. Cheaper Than PMS:

PMS stands for Portfolio Management Service, which is related to the stock trading and investment. Stockbrokers basically provide these type of services taking a hefty amount of fees, brokerage and performance fees. A study shows the returns from PMS and mutual funds for a longer period of time say 5 years is almost at par. So, it would be advisable to invest in mutual funds rather than PMS as the expenses in the later is much higher.

4. Easy Liquidity:

An investment in Mutual Fund gives its investors the super-liquidity. One can withdraw his/her investment as and when required in case of open-ended funds. As a person requests the fund house for redemption, the mutual fund units are valued at prevailing rate and the amount is refunded within a short span of time to his/her bank account. In the case of liquid funds, one can withdraw the money even on a real-time basis.

5. Diversification:

The best part of the mutual fund is that the total investment amount is diversified in various sectors or stocks. Since experts known as fund managers are entrusted with the job of diversification and distribution of the money of the investors among various companies, it is almost believed to be in the safe hands and a reasonable amount of return is expected out of it.

6. Regulated by SEBI:

It’s an icing on the cake. Both return and security at the same time. As per SEBI guidelines, the AMCs (Assets Management Companies) has to declare NAV of the funds regularly, which reduces the chances of frauds and manipulations considerably. Your mutual fund investments are absolutely secured and strictly monitored by SEBI. The government has framed stringent rules for investment of the funds by fund houses and statutory reports are duly collected from them.

7. Wide Range of Investment Choices:

There’s no doubt about it that mutual fund is the most versatile investment opportunity present in the market. Starting from low-risk group to high-risk bearer, everybody can invest in mutual funds. For example one can invest in less risky bond funds to keep the investment value secured, alternatively, people can also invest in highly risky sector funds for gaining more than others. Tax saving funds are also available to help investors in curbing tax while investing as well.

8. Managed by Experts:

This is crucial. You cannot sleep well if your investments are in the hands of a novice. Thank God, the mutual fund houses entrust your investment amounts to some experts knows as fund managers. Normally they are experienced people and have expertise in their niche. Though your gains are not guaranteed being managed by fund managers, yet their performances are way better than any Tom, Dick or Harry.

9. Charges are Low:

The charges levied by the fund houses are comparatively lower than investing in equity shares. Regulatory bodies have shown their concern about the investment amount of the people and nullified the loads charged by the fund houses at the time of entry or exit in most of the cases. In fact, there are direct investment opportunities where you will not have to pay any brokerage at the time buying mutual funds.

10. Tax Benefit:

A very important feature yet to be discussed is that the gains out of long-term mutual fund investments are tax-free. So your tax worry will not be a hindrance in investing in mutual funds. In fact, in the case of tax saving mutual funds, you can save tax by investing in mutual funds too.


Well, the list doesn’t exhaust here, there are many more points in favour of mutual fund investments, but it is equally important not to pile up your money only for a single investment opportunity. Your investment program would be treated a prudent one if it is well diversified, systematically maintained and closely monitored. It’s very important to be a disciplined investor rather than a mere market opportunist.